OFFICIAL INFORMAL NUMBER 137 -0302)

C O N F I D E N T I A L SECTION 01 OF 02 COLOMBO 001839

SIPDIS

OFFICIAL INFORMAL

DEPT FOR SA/INS FROM AMBASSADOR WILLS

E.O. 12958: DECL: 10-03-12
TAGS: AMGT CE LTTE
SUBJECT: OFFICIAL INFORMAL NUMBER 137 -0302)

CLASSIFIED BY DCM LEWIS AMSELEM. REASONS 1.5, B,D.

CONTENTS: TREASURY/AID ASSESSMENT READOUT
OTHER ASSESSMENTS
DEMINING IN LTTE AREAS
CAMBODIA'S COLOMBO PLAN DUES

TREASURY/AID ASSESSMENT READOUT
--------------

1. (U) The joint Treasury/AID team had a tremendously
successful one-week visit here last month. It was packed
with meetings from early morning into each evening. Even
though it was an office director (and below) level team,
we had no problems getting meetings with numerous
Ministers (Finance, Economic Reform, Labor and the
Central Bank Governor),who were eager to discuss U.S.
aid and technical assistance. We in the mission, for our
part, are very happy with how the mission went and its
outcomes thus far.


2. (U) The main outcome of the Treasury portion of the
mission will be the placement of several (at least two,
maybe more) Treasury Advisors in GSL beginning probably
early 2003. One would work on improving debt management
and one on improving budgeting; one may also assist with
the reorganization of state-run People's Bank (in big
trouble because of bad loans). GSL was extremely
enthusiastic about having long-term Treasury Advisors
working with it to improve its performance on some of the
areas key to economic reform. A follow-up mission from
Treasury to scope-out the particular projects is due here
week of October 14.


3. (U) While Treasury was here to identify specific
technical assistance projects, the AID portion of the
mission had a more general objective of determining what
areas the AID program should focus on in the future.
Based on the debrief the AID visitors gave the DCM at the
end of its visit, AID is looking to focus on two themes
here: facilitating economic growth island-wide and
economic-integration of the North/East with the rest of
the country. Some specific areas mentioned were: making
industry and labor more productive; further developing
the financial sector; improving agricultural
productivity; helping GSL rationalize government (e.g.
customs reform); helping GSL communicate its reforms
better to the people; and promoting further
decentralization of government functions. The visitors
also mentioned that AID would be willing to look at
helping Sri Lanka prepare for FTA negotiations with the
U.S., should that become a near-term possibility.

OTHER ASSESSMENTS
--------------


4. As you know, the Peace Corps hasn't properly assessed
us yet. That will happen soon. The PACOM team is in
country now. And the NDU team's report just reached us
by email yesterday (10/2) and has been forwarded to INS
and the SA FO, also via email. (FO)

DEMINING IN LTTE AREAS
--------------

5. (C) In reply to your o/i query, we do not think the
U.S. should be involved directly (repeat directly) in any
demining projects that take place in LTTE-controlled
areas. As you know, the LTTE is on the FTO and we do not
think USG officials should be involved in interactions
with the group. For the same reason, we do not think the
U.S. should be involved in directly funding any local
NGOs controlled by the LTTE that are doing demining.
That said, we could see funding international NGOs that
may want to do demining in LTTE-controlled areas, such as
HALO Trust. We already have a precedent to rely on: we
provide funds to CARE which does work in LTTE areas. In
general, however, we think there is more than enough
demining to be done in GSL-controlled areas, including
projects that directly benefit Tamils and Muslims. The
QRDF's project in Jaffna, for example, mainly benefits
Tamils living in what is a GSL-controlled area.


6. (U) By the way, we are faxing you an exchange of
letters between the Ambassador and Donald McCoy. McCoy,
writing on behalf of the Marshall Legacy Institute (MLI),
requests U.S. support for a demining project using dogs
that it would like to implement in Sri Lanka. It sounded
like an excellent idea to us and we know that MLI has
done good work elsewhere. Perry Baltimore, MLI's
president, is set to visit Sri Lanka in November and we
will meet with him. He may call SA/INS and Pat Patierno
in PM/HDP for a briefing before he departs the U.S. (POL)

CAMBODIA'S COLOMBO PLAN DUES
--------------

7. (U) During the most recent Colombo Plan meeting,
Cambodia's request to be exempt from the USD 14,500
annual dues was raised again. A motion was passed to
postpone making a decision on the matter until the April
14-16, 2003, Consultative Committee Meeting in Tehran.
As the issue comes up, we'll continue to insist that the
Khmers pay up, per the previous guidance we received from
the Department. By the way, has anyone had a chance to
review our action request re participation in the Tehran
meeting, which was sent way back in July (Colombo 1412)?

WILLS